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I’m looking for a BTL in Oxford and I’m finding that they are above my limit - (about £20k more than I can afford).
I’m considering going to a property auction. I’ve only bought 2 proprieties through the usual method in the past so it’ll be my first auction.
1. Would you advise against going to an auction given I’m a newbie?
2. Can you offer any tips or dos and donts for a first timer at an auction?
Hi M,The anagram of auction is "caution". It is generally believed that newbies should be cautious of auctions as they are generally the province of more experienced investors, developers, and traders.It would certainly be a prudent idea to visit your local auction house a few times to get a feel for the action, and also to start to develop a relationship with the auctioneer. He will be able to guide you to suitable properties that may meet your criteria, although you will have to do intensive due diligence of your own.I have moved your post to the Auction Tribe as there is a huge amount of information and tips.I suggest you read through the tribe and pick out some of the discussions that address the questions you have.We also have some useful videos:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thats really helpful - thank you for your advice. I think I'm going to give the auction option a miss as I dont have enough experience and I can't afford to make a mistake.
In a word - 'Don't!' - especially as a newbie.
My business partner and I have both built sizeable, profitable portfolios without ever resorting to auctions.We also procure properties for our existing landlords and investors and have never bought one at auction.
I do go along now and again because I'm nosy but when I come away, it just underlines the reasons I stay away.
LETS MAKE HOMES by treating landlords as partners, tenants as customers & every property as our own."
Thanks Ed, you post and responses from others has been most helpful, I dont think Im ready for auctions
I've bought 9 properties from auction and haven't come unstuck yet. I've sold 8 and kept 1 as a BTL. It is daunting and there are a lot of bad properties that you need to avoid.
If you really want to go down this route I would at first do a 'dry run'. In other words research a couple of properties, decide how much you would pay for them, go to auction and see what they go for. This is what I did and they both went for around the price I had I my head.
I've never had a property surveyed as I have some building knowledge and experience. I always value the property and the knock off about £10,000, just in case I've missed something. Even if a house needs underpinning, £10,000 should be enough.
Always visit the property and one thing to look out for is Japanese Knotweed. When I see that I always walk away, and I've seen it about 4 times. Always check out the electric meter and fuse box and gas meter. I've had to have gas run into 2 of my properties as there wasn't any. Not as expensive as you would think, both less that £1,000 each. i always video the visit.
I always talk to the neighbours and local estate agent and get their opinion on its value and what the area is like. Agents are keen to talk to you as you may end up either renting or selling through them. I am amazed when I go to them and they tell me no one else has spoken to them.
Search online for previous sales of that property or neighbouring properties. Go onto local council planning applications to make sure anything done in the house has been done properly. I once found out an Annexe flat I wanted to bid on had a demolition order on it as it hadn't had planning permission and they had lost their 8 year battle with the council. Someone bought a pile of rubble for £250,000.
I like my properties as derelict and bad a condition as possible to get them cheap, so have always had to budget for Complete re-plaster, new electrics, new plumbing, new boiler, new bathroom and kitchen. Only ever had to get new roof once and one totally woodworm rotten floor.
Lastly, once I've done all my own research gone through the legal pack myself and am still happy to go ahead, I pay a solicitor to go over the legal pack as well. I pay about £100 for this and very often he picks up things I missed. Some want to charge a lot more, but most auctions have these legal people there to do it for you, so pick up their card on your dry run. (Obviously I didn't pay for this do be done on my dry run).
Yes lots of pitfalls and some risk, but if you keep your head, do lots of research, it is immensely satisfying and financially rewarding. One last thing, set the price and DON'T go over it. there are loads of properties out there at auction.
Thanks Derek, your post and responses from others has been most helpful, I dont think Im ready for auctions
You have been given some sound advice here and do take a look at the videos. It may well be that auctions are not quite for you at present, but if you would like to have a free trial of our website for a week let me know. You will be able to see what properties in your locality have been selling for at auction and make a more informed judgement base on the information. in addition you will be able to see the types of property coming up for sale though at present there are not many as very few catalogues are out at present. In addition we have a comprehensive guide to buying at auction that may well be of use. I can be contacted on firstname.lastname@example.org
MD, Essential Information Group
There is always the old addage 'everyone has to start somewhere'.
I'm a positive believer in auctions, you can buy cheap and you can buy a bad egg. Have i bought a bad egg before....yes, will i again...probably have i recommended a client buy a bad egg at auction....yes (not knowingly) - was it possible to check before buying not really/maybe (got maths wrong on est refurb works - a lot more than estimated as property was large, grade 2 listed and very tall ceilings).
having said the negative i've bought over 200 at auction (mostly for clients) and the average is better than buying outside auction ('its a numbers game). I'd keep options open. Some properties are simple to check for value and issues. Avoid anything where you think could be a risk or unknown. Repo in a block (especially ex new block less than 10yrs old) is reasonably safe although i have seen blocks of flats less than 10yrs old with issues - normally easy to find out about mind (from agents, leaseholders, freeholders / their managing agents etc).
Derek - why do you run away from japanese knotweed. I love the stuff. Everyone else runs miles from it, you can buy super cheap, easy to fix 1-2k cost and its gone (for at least 10yrs anyway) and 99% of banks are ok with it i.e. will lend. only does damage if left for yrs on end right next to the building.
also feel free to get in touch if you'd like any further advice or help buying at auction.
regards Andrew Peers - property investor / sourcer - 07912674181
Property Redress Scheme Number 011436 NLA member 174404